Saudi Arabia's Energy Transition: ACWA Power's Gas and Solar Expansion as a Strategic Entry Point for Investors

Saudi Arabia's Vision 2030 has redefined the kingdom's economic and energy trajectory, positioning it as a global leader in renewable energy and sustainable infrastructure. At the heart of this transformation is ACWA Power, a Saudi multinational energy company that has emerged as a linchpin in the kingdom's shift from oil dependency to a diversified energy mix. With a dual focus on gas and solar projects, ACWA Power's strategic alignment with national targets, coupled with robust financial backing and long-term contracts, presents a compelling case for investors seeking stable returns in a high-growth market.

A Dual-Track Strategy: Gas and Solar as Complementary Pillars

ACWA Power's energy portfolio in Saudi Arabia is a masterclass in balancing short-term reliability with long-term sustainability. The company's recent financial close on two 1,800 MW Combined Cycle Gas Turbine (CCGT) projects—Rumah-1 and Al-Nairyah-1—demonstrates the maturity of the kingdom's energy ecosystem. These projects, backed by a $3.4 billion non-recourse loan from a consortium including KEXIM, Saudi National Bank, and Chinese state banks, are structured with 28-year terms and a 40-35-30 equity split between ACWA Power, Saudi Electricity Company (SEC), and KEPCO. The inclusion of carbon capture readiness in these plants aligns with Saudi Arabia's net-zero goals and positions ACWA to capitalize on future carbon credit markets.

Simultaneously, ACWA Power is scaling solar energy at an unprecedented pace. The company recently secured SR31 billion ($8.3 billion) in funding for seven solar and wind projects totaling 15,000 MW, including the 3,000 MW Bisha and Humaij solar plants in Asir and Madinah. These projects, part of the National Renewable Energy Programme, are expected to operationalize by 2028 and will contribute to Saudi Arabia's target of generating 58.7 GW of renewable energy by 2030. The financial close on these projects, supported by the Public Investment Fund (PIF) and international lenders, underscores investor confidence in the kingdom's ability to deliver on its energy transition promises.

Financial Maturity and Risk Mitigation

The scale and structure of ACWA Power's projects highlight a maturing energy ecosystem. The Qurayyah CCGT project, a 3 GW plant in the Eastern Province, exemplifies this. With a 50-year Power Purchase Agreement (PPA) signed in February 2025 and a $3.57 billion investment split between ACWA Power, SEC, and Haji Abdullah Alireza & Co. Ltd., the project is a low-risk, high-reward endeavor. The PPA ensures stable revenue for decades, while the project's carbon capture readiness future-proofs it against regulatory shifts.

For investors, the key takeaway is the alignment of ACWA Power's projects with Saudi Arabia's policy framework. The kingdom's 2030 goal of generating 50% of electricity from gas and 50% from renewables is not just aspirational—it is operationalized through ACWA's partnerships with state entities and global lenders. The company's ability to secure long-term financing from diverse sources, including export credit agencies and regional banks, further reduces exposure to market volatility.

Strategic Positioning and Global Partnerships

ACWA Power's success is also tied to its global partnerships. The company's collaboration with GE Vernova, which includes a $14.2 billion initiative in Saudi Arabia, highlights the international confidence in the kingdom's energy market. Additionally, ACWA's recent deepening of ties with Europe and China—through projects like the Yanbu Green Hydrogen Hub—positions it as a key player in the global energy corridor. These partnerships not only diversify revenue streams but also enhance ACWA's technological edge, particularly in green hydrogen and desalination.

The company's environmental and social initiatives further strengthen its investment appeal. ACWA Power has pledged to plant one million trees by 2030 under the Saudi Green Initiative and has trained over 15,000 students through its Energy and Water Academy. These efforts align with ESG (Environmental, Social, and Governance) criteria, making ACWA an attractive option for socially conscious investors.

Investment Implications

For investors, ACWA Power represents a rare combination of policy alignment, financial stability, and growth potential. The company's projects are underpinned by long-term PPAs, government-backed financing, and a clear roadmap for scaling renewables. The recent financial close on CCGT and solar projects signals that Saudi Arabia's energy transition is no longer theoretical—it is a reality with measurable returns.

Key Considerations for Investors:
1. Long-Term Contracts: ACWA's 50-year PPAs and 28-year financing terms provide predictable cash flows, reducing exposure to market cycles.
2. Diversified Funding: The mix of local, regional, and international lenders mitigates risk and ensures liquidity.
3. Policy Tailwinds: Saudi Arabia's Vision 2030 and net-zero goals create a regulatory environment that favors ACWA's business model.
4. Global Partnerships: Collaborations with GE Vernova, EnBW, and Chinese state banks enhance scalability and technological innovation.

Conclusion

ACWA Power's expansion in Saudi Arabia is a testament to the kingdom's ability to attract and execute large-scale energy projects. For investors, the company's dual focus on gas and solar, supported by robust financial structures and strategic partnerships, offers a unique opportunity to participate in a market poised for decades of growth. As Saudi Arabia transitions from oil to a diversified energy economy, ACWA Power stands at the intersection of stability and innovation—a strategic entry point for those seeking to capitalize on the next phase of the global energy transition.